My earlier post discussed already my opinion about the current role of the shareholdership of companies. As coincidence does not exist, when I visited last week the Netherlands I read a column of Prof Mathieu Weggeman in the NRC Handelsblad of March 23. Though it is all in Dutch it is nevertheless interesting and courageous of Mathieu.
In the light of the possible merger between ABN-AMRO and Barclays, he heavily attacks TCI, a speculative investment fund. Numbers of companies in the Netherlands already suffered from real attacks of this kind of funds. With only 1% of the shares, they try to force the management of ABN-AMRO to do exactly what they would like to obtain. In general, they try to force the management in large companies, to temporary raise the shareholder value, even is this would be via activites that would be catastrophic in the long term. Such a short term raise would then allow them to cash. As I suggested in my previous post: what is the difference with a casino.
Well, the difference is that a company is a number of employees that try to give the best of what they have, in order to co-create value. Isn't value creation the basis of economic profit anymore ? Indeed one could question that. In my previous post I called it second derivative thinking. To say it even more blunt: those hedge funds have created a completely virtual market, without any economic fundament. We have had unfortunate experiences with some of them in the past, but they just continue.
Aloy Soppe, lecturer in financial ethics proposes an alternative for quoted companies. For sure, the all empowering shareholder model needs a more than fundamental face lift.
An Article In the Standard, showed her before and after--and she looked like a haggard old lady--and now she looks like she's surprised all the time. How many times can she lift that one ugly face...and doesn't she know you can't make chicken-sh--t into chicken salad--no matter how hard she tries?
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